Sunday, March 4, 2012

The Fed, Wall Street, and the Presidential Election

While I still vote out of nostalgia for the democracy and civil liberties we once had ... my experience with the market tells me that this specific election is in the hands of the Fed and Wall Street.

No incumbent President has ever won the election with the stock market in a downturn and the stock market can't keep at these levels without more quantitative easing ... or money suddenly coming in from the sidelines which is now being horded by corporations around the globe .... before we go to the polls.

Conversely incumbents have Teflon and can do all sorts of things, legal or otherwise, when the market is rising. The Dow is almost at 13,000 now. Should it break 13,000 ... an indication that Obama has the confidence of Wall Street will be it remaining above 11,000 as we go into vote. The 10,000 range means something of a contest leaning in direction of Romney. Anything in the 9,000 range means an insured Romney victory.

From Wall Streets perspective as of today ... both candidates will do nicely. Its just a question of how they dot their I's and cross their T's. Till then we will have this bread and circus election ... the bread of fundraising for the candidates and the circus of the campaigns ... which by and large has no substance or meaning at all beyond the inflammatory meant to frighten us into shelling out money for the various election funds and super pac's. One must remember in our market economy an elected official is a commodity and brand. There is money to made in the careful and well timed fluctuation of those brands value as measured on the spot market of what we call election polls.

Speculating into the future with no crystal ball ... nor a memo from those in key positions to know ... I would think Obama will be the next President of the United States. While the US stock market should decline in the next few months in a dramatic leg down it will be answered with one of the following: The E.U. tanks sometime next year due to its economic crisis an money flows into our markets as a "safe haven" and stocks rise ... or ... as long as Industrial Capacity Utilization is under or at 80% or thereabouts quantitative easing will have no short term risk of hyperinflation.

And should Capacity Utilization rise above 80% the second Obama term will declare victory and dismantlement the stimulus plan, and when the domestic stock market decline again, take us into a war with Iran ... which would be the Romney agenda as well.

Still ... its important to think we have choice. The nation is built on us believing that is so.

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